Modification of Law 2/1981, of 25th March, Regulating the Mortgage Market Article 13 Modification of Law 2/1994, of 30th March, on subrogation and modification of

FIRST ADDITIONAL REGULATION. Regulation relating to the reverse mortgage

1. For the purposes of this Law, reverse mortgage is held as the loan or credit guaranteed by mortgage over a real estate asset which is the applicant’s habitual abode and provided that they comply with the following requirements:

a) that the applicant and the beneficiaries that the former may designate are persons who are 65 years old or older or affected by severe long-term care or great long-term care,

b) that the debtor disposes of the amount of the loan or credit through periodical or single disposals,

c) that the debt is only demandable by the creditor and the guarantee enforceable when the borrow dies or, if thus stipulated in the contract, when the last of the beneficiaries dies,

d) that the mortgaged property has been valued and insured against damage in accordance with the terms and requirements established in articles 7 and 8 of Law 2/1981, of 25th _{March, Regulating the Mortgage Market.}

2. The mortgages referred to in this regulation can only be granted by the credit institutions and by the insurance companies authorised to operate in Spain, without

prejudice to the limits, requirements or conditions that the sector regulations impose on the insurance companies.

3 The reverse mortgage transparency and marketing regime shall be established by the Minister for Finance and Treasury.

4 Within the framework of the clients transparency and protection regime, the entities established in section 2 which grant reverse mortgages must provide the applicant of this product with independent advice services, taking into account the applicant’s financial situation and the economic risks arising from subscribing this product. Said independent advice must be performed through the mechanisms determined by the Minister for Finance and the Treasury. The Minister for Finance and the Treasury shall establish the conditions, form and requirements for the performance of these advisory functions.

5. On death of the mortgage debtor or if thus stated in the contract, on death of the last of the beneficiaries, the heirs can cancel the loan in the stipulated period, paying the mortgage creditor all of the due debt, with its interest, without the creditor being entitled to demand any compensation at all for the cancellation.

In the event that the mortgaged asset has been voluntarily transferred by the mortgage debtor, the creditor can declare the early termination of the guaranteed loan or credit, unless the guarantee is substituted sufficiently.

6. When the loan or credit regulated by this regulation is cancelled and the heirs of the mortgage debtor decide to not repay the due debts, with their interests, the creditor can only obtain recovery up to the amount of the inherited assets. For these purposes that stated in paragraph two of article 114 of the Mortgage Law shall not be applied.

7. The public deeds documenting constitution, subrogation, modifying novation and cancellation will be exempt from the gradual mode of “Actos Juridicos Documentados” or stamp duty on notarial documents.

8. In order to calculate the notary fees for the constitution, subrogation, modifying novation and cancellation deeds, the tariffs will be applied corresponding to the «Documents without quantum» envisaged in number 1 of Royal Decree 1426/1989, of 17th November, which passes the Notary tariffs.

9. In order to calculate the register fees for the constitution, subrogation, modifying novation and cancellation deeds, the tariffs will be applied corresponding to number 2, «Entries», in appendix I of Royal Decree 1427/1989, of 17th _{November, which passes the} registrar’s tariffs, taking as a base the amount of the capital pending repayment, reduced by 90 percent.

10. Likewise, reverse mortgages may be constituted against any other properties, other than the usual home of the applicant. The previous paragraphs of the provision herein shall not apply to these reverse mortgages.

11. For everything not envisaged in this regulation and the rules that develop it, the reverse mortgage will be governed by that set out in the applicable legislation in each case.

SECOND ADDITIONAL REGULATION. Regulation relating to long-term care insurance.

1. Long-term care cover can be instrumented either through an insurance contract signed with insurance companies, including the mutual social welfare companies, or through a pension plan.

2. The long-term care cover performed through an insurance contract binds the insurer, in the event that there becomes a situation of long-term care, in accordance with that set out in the regulations promoting personal autonomy and attention to persons in a situation of long-term care, and within the terms established in the law and in the contract, to comply with the agreed benefit in order to, totally or partially, directly or indirectly, deal with the detrimental consequence for the insured party as a result of said situation.

The long-term care insurance contract can be articulated either through individual or group policies.

If there is no express rule referring to long-term care insurance, the rules regulating insurance contracts and the regulation and supervision of private insurance shall be applied to it.

In accordance with that established in article 6 of the consolidated Private Insurance Regulation and Supervision Law, passed by Legislative Royal Decree 6/2004 of 29th October, the insurance companies must have the compulsory administrative authorisation and other requirements necessary in order to provide life or health insurance in Spain.

In order for the mutual social welfare companies to cover the long-term care contingency, which stated in articles 64, 65 and 66 of the consolidated Private Insurance Regulation and Supervision Law, passed by Legislative Royal Decree 6/2004 of 29th October, and the rules developing it, shall be applied.

3. The pension plans which envisage the long-term care contingency cover must be expressly stated as such in their specifications. For all not expressly envisaged the consolidated Pension Plans and Funds Regulation Law, passed by Legislative Royal Decree 1/2002, of 29th _{November, and the rules developing it, shall be applied.}

THIRD ADDITIONAL REGULATION

Section 3 of article 693 of the Civil Procedure Law 1/2000, of 7th January, is modified as follows:

«3. In the case referred to in the previous section, the creditor can request that, without prejudice to the fact that the enforcement affects the entire debt, the debtor is informed that, up until the day set for the auction, it can release the asset by paying into court the exact amount of the principle and interest due on the date the claim is presented, increased if applicable by the loan’s due dates and the delay interest incurred during the proceedings and which are totally or partially unpaid. For these purposes, the creditor can request that the procedure follows that set out in section 2 of article 578.

If the mortgages asset is a family home, the debtor can, even without the creditor’s consent, release the asset by paying into court the amounts stated in the previous paragraph.

Once an asset has been released for the first time, it can be release on more occasions provided that at least 5 years have passed between the date of release and the judicial or extrajudicial summons for payment made by the creditor.

If the debtor makes the payment under the conditions set out in the previous sections, the costs shall be liquidated and once they are paid the court will pass judgment declaring the proceedings over. The same will be agreed when the payment is made by a third party with the executor’s consent.»

FOURTH ADDITIONAL REGULATION. Assurance of future incomes by the constitution of a reverse mortgage.

The periodic disposals that the beneficiary may obtain as a result of the constitution of a reverse mortgage can be totally or partially used to contract a secure income plan, under the terms and conditions set out in section 3 of article 51 of the Personal Income Tax Law and the partial modification of the laws on Corporate Tax, Non-Residents Income Tax and Net Worth Tax. For these purposes, the survival of the holder after ten years have passed since the payment of the first premium of the said secure income plan will be the same as the retirement contingency set out in letter b) of section 3 of article 51 of said Law 35/2006.

The mathematical provision of the secure income plan can not be moved to another welfare instrument, and neither can the consolidated rights or the mathematical provision of other welfare systems be moved to it.

FIFTH ADDITIONAL REGULATION. Special rules for assessment of the patrimonial disposals, in order to determine the economic capacity of long-term care assistance applicants.

SIXTH ADDITIONAL REGULATION.Event «33. º American’s Cup»

SEVENTH ADDITIONAL REGULATION.Fiscal Regime of the Event«33. º American’s Cup»

SOLE TRANSITIONAL REGULATION. Transitional Regimes.

1. Until the subsequent regulation referred to in section one of article 17 of Law 2/1981, of 25th _{March, Regulating the Mortgage Market is developed, the entities can not issue} mortgage bonds for over 90 percent of the non-repaid capital of the affected credits. 2. Until the subsequent regulation referred to in section two of article 9 of this Law is developed, the reference interest rate to be used in order to calculate whether there is a capital gain for the purposes of said section, regardless of the remaining term of the mortgage loan or credit, shall be the internal yield rate in force in the public debt secondary market with residual maturity of between 2 and 6 years, regulated by Decision of the General Treasury and Finance Policy Department of 5th _{December 1989.}

3. Any capital increase, without alteration or subordination of the rank of the registered mortgage, according to article 13, section 2 of the Law hereof, amending article 4, Law 2/1994, of 30th March on subrogation and modification of mortgage loans, shall only apply to those mortgages constituted after the present Law comes in force.